Chesapeake says it can no longer pay dividends and now the stock is tanking

Chesapeake shares fell 5% on Tuesday after the company said it is will not pay shareholders dividends from the third quarter.

In a press release on Tuesday, CEO Doug Lawler said: "Due to the current commodity price environment for oil, natural gas and natural gas liquids, and the resulting reduction in capital available to invest in its high-quality assets, Chesapeake Energy will eliminate its common dividend effective 2015 third quarter and redirect the cash into its 2016 capital program to maximize the return available to its shareholders."

Lawler said removing the dividend will save about $240 million annually. He said Chesapeake still has about $2 billion in unrestricted cash, and so its balance sheet is not in shambles.

According to Bloomberg, the company is expected to post a net loss of $3.18 billion this year, its worst annual loss since 2009.

In morning trading on Tuesday, the stock fell more than 5% to a 12-year low of around $9.40 per share. The stock is down 50% year-to-date and 64% over the past 12 months.

Chesapeake is scheduled to report second-quarter results before the market open on August 5.

Here's a look at the stock price over the past year:

Chesapeake is the world's second-largest producer of natural gas, which hasn't performed great in the past year either: